Correlation Between Heritage Financial and First Financial
Can any of the company-specific risk be diversified away by investing in both Heritage Financial and First Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Heritage Financial and First Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heritage Financial and First Financial Bancorp, you can compare the effects of market volatilities on Heritage Financial and First Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Heritage Financial with a short position of First Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Financial and First Financial.
Diversification Opportunities for Heritage Financial and First Financial
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Heritage and First is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Financial and First Financial Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Financial Bancorp and Heritage Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Heritage Financial are associated (or correlated) with First Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Financial Bancorp has no effect on the direction of Heritage Financial i.e., Heritage Financial and First Financial go up and down completely randomly.
Pair Corralation between Heritage Financial and First Financial
Given the investment horizon of 90 days Heritage Financial is expected to generate 1.02 times more return on investment than First Financial. However, Heritage Financial is 1.02 times more volatile than First Financial Bancorp. It trades about 0.11 of its potential returns per unit of risk. First Financial Bancorp is currently generating about 0.09 per unit of risk. If you would invest 2,252 in Heritage Financial on August 25, 2024 and sell it today you would earn a total of 391.00 from holding Heritage Financial or generate 17.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heritage Financial vs. First Financial Bancorp
Performance |
| Timeline |
| Heritage Financial |
| First Financial Bancorp |
Heritage Financial and First Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heritage Financial and First Financial
The main advantage of trading using opposite Heritage Financial and First Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage Financial position performs unexpectedly, First Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in First Financial will offset losses from the drop in First Financial's long position.| Heritage Financial vs. Heritage Commerce Corp | Heritage Financial vs. Horizon Bancorp | Heritage Financial vs. Heartland Financial USA | Heritage Financial vs. Independent Bank |
| First Financial vs. Home Bancorp | First Financial vs. Heritage Financial | First Financial vs. First Northwest Bancorp | First Financial vs. HomeTrust Bancshares |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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